Zhao Peng: Accelerating the Construction of a New Development Pattern Must Vigorously Improve the Quality and Level of International Circulation
Building a new development pattern with the domestic macro-circulation as the mainstay and the domestic and international dual circulations mutually reinforcing one another is a major medium-to-long-term development strategy proposed by General Secretary Xi Jinping at a meeting of the Central Financial and Economic Affairs Commission in April 2020. This strategy holds global guiding significance for promoting high-quality development and building a modern socialist country in all respects. The international economic circulation, like the domestic macro-circulation, is an indispensable and vital component of the new development pattern; the two are closely linked and form an organic whole. The 20th National Congress of the CPC proposed to "enhance the endogenous momentum and reliability of the domestic macro-circulation and elevate the quality and level of the international circulation." We must comprehensively and accurately grasp the internal logic between the two and accelerate the construction of the new development pattern on the new journey of the New Era.
Building the new development pattern requires creating an open domestic and international dual circulation; we must not pursue a closed domestic single circulation.
Under market economy conditions, the scale of the market determines the depth of the division of labor, and the depth of the division of labor determines the level of productive forces and income. The most fundamental characteristic distinguishing a modern economy from a pre-modern one is the organization of production, the utilization of resources, and the exchange of commodities within a constantly expanding market scope, thereby continuously deepening the division of labor and improving efficiency. The more a country can expand its markets and utilize resources across a broader scope, the stronger its economy becomes and the higher its income levels rise. Both positive and negative experiences throughout modern world history have repeatedly demonstrated that closure leads to backwardness, while openness brings prosperity. Every country that has successfully achieved modernization has done so by leveraging its comparative advantages and actively participating in the international circulation to achieve sustained economic growth and increased per-capita income. From the perspective of China's own development experience, a decisive factor behind the miracle of long-term rapid economic development since the reform and opening up has been active participation in the global international circulation. This serves as the fundamental basis for our firm commitment to participating in and continuously elevating the international circulation.
At present, China's economy is deeply integrated into the world economy, maintaining close industrial and market links with many countries globally; the domestic and foreign demand markets are inherently interdependent and mutually reinforcing. Emphasizing the domestic macro-circulation as the mainstay by no means implies abandoning or weakening the international circulation, nor does it mean operating behind closed doors. Rather, it is about leveraging the advantages of a large-scale economy to achieve the integration and interaction of the domestic and international circulations at a higher level. This enhances the linkage effect of domestic and international markets and resources, providing the material support for building a modern socialist country in all respects. Since the 2008 international financial crisis, anti-globalization sentiments have surged worldwide, with unilateralism and protectionism rising significantly, and economic globalization encountering headwinds. Particularly in recent years, influenced by factors such as the pandemic of the century and geopolitics, global issues have intensified, and the world has entered a new period of turbulence and transformation. However, it must be recognized that these changes have not altered the basic logic that the international division of labor and trade are conducive to the economic development of all nations. Economic globalization remains the general direction for the development of modern global productive forces. The potential for global trade and division of labor is far from exhausted, and there remains vast space for all countries to achieve common development through these means. China’s development cannot be isolated from the world, and the world’s development cannot be isolated from China. Some countries, acting from self-interest, have undermined the existing international economic order, attempting to use their dominant positions to engage in "decoupling and breaking chains" or building "small yards and high fences" [1] in an attempt to cut China out of the global market and industrial system and shape a "globalization without China." This approach contradicts the direction of historical progress and the objective laws of economic development; it is impossible to achieve. Faced with a complex international environment, we must "not let floating clouds obscure our vision" [2] (bù wèi fú yún zhē wàng yǎn), clearly recognize the general trend, maintain firm confidence, eliminate interference, persist in the right path, uphold high-level opening up, and continuously improve the quality and level of the international circulation.
In the new development pattern, the domestic macro-circulation is the foundation and mainstay, while participation in the international circulation is an inevitable requirement under the conditions of economic globalization and the international industrial division of labor. When the international circulation is disrupted, we promote the formation of a massive and smooth domestic economic circulation and strengthen the mainstay status of the domestic macro-circulation. On the one hand, this helps stabilize the domestic economic fundamentals, enhances the resilience of economic development, and advances our economic development level with the times. On the other hand, it can better drive and activate the international circulation, providing more market opportunities for all countries and turning China into a powerful gravitational field attracting high-quality global factor resources. This satisfies domestic demand while elevating China's industrial and technological development, creating new advantages for participating in international economic cooperation and competition, and ensuring that domestic and international circulations reinforce and complement each other. Building the new development pattern does not mean a decline in the status of opening up; rather, it signifies a higher level of opening up. We must grasp the dialectical relationship between the domestic and international circulations and coordinately advance the expansion of domestic demand, supply-side structural reform, and high-quality opening up. Looking ahead, the scale of China's foreign trade imports and exports, utilization of foreign capital, and outward investment will continue to expand, and its position in the international economy will continue to rise.
Building the new development pattern requires better coordination between openness and security; we must not fall into a passive or reactive international circulation.
As the international environment changes and China's economy continues to grow and strengthen, China's role in the global economic system is undergoing a profound transformation. On the new journey of building a modern socialist country in all respects, we will inevitably encounter various external interferences and obstacles, and face tests of "high winds and turbulent waves" or even "stormy seas" (jīng tāo hài làng). The manner in which we participate in the international circulation must be adjusted accordingly. The construction of the new development pattern is a major strategic deployment proposed by the Party Central Committee, viewing the situation as a whole and with a long-term perspective, to accurately identify changes, scientifically respond to changes, and proactively seek changes [3] in light of the shifting conditions of China's development environment. Faced with a new development environment full of challenges and uncertainties, we must coordinate development and security, plan proactively, and act vigorously. We must seize strategic initiative through opening up and shape a proactive, controllable international circulation, avoiding the pitfalls of a passive international circulation characterized by sole reliance on foreign demand, over-dependence on external technology and resources, and a lack of security risk control mechanisms.
The market is a scarce global resource. As a super-large-scale country, China possesses a vast domestic market that many countries do not have. This is the material basis for "dual circulation" and a unique advantage for China to proactively shape the international circulation under new historical conditions. Currently, China's economic aggregate accounts for over 18% of the global total, contributing approximately 30% to global economic growth. The scale of its trade in goods and services ranks first in the world, and it is the primary trading partner for over 140 countries and regions. China has a population of over 1.4 billion, accounting for nearly one-fifth of the global total—more than the combined population of existing developed countries. China's per capita GDP is approaching the threshold for high-income countries. The integrated entry of 1.4 billion Chinese people into a modern society means recreating a market nearly equivalent in scale to the sum of all existing developed countries; this process will create immense commercial opportunities. A super-large-scale domestic market combined with an open international market brings significant advantages to China's economic development, most notably economies of scale, innovation development advantages, and shock-resistance capabilities. Relying on these advantages, China has formed the world's largest manufacturing system with the most complete range of categories, a powerful supply capacity meeting diverse international and domestic needs, a creative and vibrant industrial ecosystem, and a relatively stable macroeconomic environment. This provides a solid foundation for Chinese enterprises to participate in the international division of labor and competition, and creates an extremely favorable industrial and market environment for companies worldwide to invest in China. We must leverage our comparative advantages, continuously consolidate and enhance our position in the global division of labor system, improve our ability to resist various risks and challenges, and actively shape a high-level, proactive international circulation.
A proactive international circulation is grounded in a strong and robust domestic macro-circulation. With a domestic macro-circulation characterized by strong internal demand, high-level technological self-reliance and strength, a complete industrial system, and secure resource factors, we can withstand the impact of various extreme circumstances. We will have more confidence and a greater capacity to expand opening up, participate in international cooperation and competition, and curb various acts of protectionism and unilateralism, thereby better promoting the international circulation. A smooth international circulation, in turn, brings richer high-quality factor resources and more diverse, stable market demands to the domestic macro-circulation, promoting the perfection of market mechanisms and the growth of a modern domestic economic system. Over the past three years, despite the significant impact of protectionism and the pandemic of the century on global trade, China's economy has developed steadily, and its foreign trade has grown significantly against the trend, with the total value of imports and exports increasing by an annual average of over 10% and exports by 11.6%. This demonstrates that so long as we proactively seek and respond to change, adopt correct strategies, and leverage our advantages, we can overcome various adverse factors, proactively shape the international circulation, and promote domestic economic development and global common prosperity.
We must adhere to the correct direction of economic globalization, continuously expand our "circle of friends," and work with all peaceful and progressive forces to promote the construction of an open world economy and maintain a pluralistic and stable international economic pattern and trade relations. We should actively participate in the reform and construction of the global governance system, adhere to true multilateralism, and participate in the formulation and maintenance of various international economic and trade rules. We must oppose the creation of bloc-based and exclusive "small circles" targeting specific countries, and push for multilateral mechanisms such as the World Trade Organization (WTO) and Asia-Pacific Economic Cooperation (APEC) to play a better role. We should promote the high-quality development of the Belt and Road Initiative, consolidate and strengthen economic and trade relations with developing countries and neighboring nations, and promote common prosperity and development. We must promote the diversification and robustness of overseas markets and supply chain systems, enhancing the resilience and stability of the international circulation. We should strengthen the support systems for the international circulation in fields such as standards, law, and logistics, and advance the internationalization of the RMB in an orderly manner.
In international economic and trade cooperation, we must firmly safeguard our legitimate rights and interests, oppose all forms of protectionism, unilateralism, and bullying, and actively utilize universally recognized international economic and trade rules and dispute settlement mechanisms. We must use legal and economic means to protect the legitimate rights and interests of Chinese business entities, including foreign-funded enterprises in China. Focusing on holistic security and dynamic security, we must comprehensively improve our ability to safeguard national security under open conditions, improve institutional arrangements such as security reviews and anti-monopoly investigations that are common internationally, and scientifically set opening levels adapted to our security protection capabilities. We must advance various opening-up measures in a steady and orderly manner, improve the stability and security of the international circulation, and effectively safeguard national sovereignty, security, and development interests.
Building the new development pattern requires a high-quality international circulation driven by high-level opening up; we must prevent a low-level international circulation characterized by low-quality quantitative expansion.
In previous years, China experienced a period of sustained and rapid expansion of foreign trade, which played a huge role in economic development and improving people's livelihoods. However, problems also existed, such as extensive (crude) expansion methods, vicious low-price competition, excessive consumption of resources and the environment, and excessively large trade surpluses. Building the new development pattern on the new journey of the New Era requires promoting high-level opening up, steadily expanding institutional opening up with regard to rules, regulations, management, and standards, and effectively improving the quality and level of China's participation in the international circulation.
We must build a strong trade nation to high standards, cultivate new growth points for international economic and trade cooperation, and participate deeply in the global industrial division of labor and cooperation at a higher level and across a broader scope. We should expand a global network of high-standard free trade areas and actively promote joining high-standard economic and trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement (DEPA). We must proactively align with relevant rules, regulations, management, and standards to deepen domestic reforms in related fields. We should promote the optimization and upgrading of trade in goods, innovate mechanisms for the development of trade in services, and vigorously develop digital trade. We should strengthen the construction of brands, quality, and channels for export products, exert greater efforts to tap into international markets, stabilize the scale of foreign trade, and optimize the trade structure.
We must actively create a first-class market-oriented, law-based, and internationalized business environment, and exert greater efforts to attract and utilize foreign investment. We should further widen market access, reasonably reduce the negative list for foreign investment access, and increase the opening of the modern service industry. We must implement national treatment for foreign-funded enterprises, promote fair competition, and protect the rights and interests of foreign investment and operations in accordance with the law. We should provide targeted services for foreign-funded enterprises, actively respond to their concerns, and solve various practical problems. We must provide the greatest degree of convenience for foreign businesses coming to China for trade and investment negotiations, and take effective measures to stabilize and retain enterprises facing pressure to relocate. We should actively promote the implementation and construction of landmark foreign-funded projects and place greater emphasis on attracting small and medium-sized foreign enterprises to invest in China.
We must optimize the spatial layout of regional opening up, implement the strategy to upgrade Pilot Free Trade Zones, and leverage the international circulation to promote the balanced and sustainable development of domestic regional economies. We should consolidate the leading position of the eastern coastal areas in opening up, improve the level of opening up in the central, western, and northeastern regions, accelerate the construction of the New Western Land-Sea Corridor, and build a group of regional development hubs serving the high-level international circulation. We should leverage the pioneering and pilot roles of platforms such as Pilot Free Trade Zones, the Hainan Free Trade Port, and various development zones and bonded areas. On the premise of ensuring security, we should actively explore and pilot the alignment of rules, regulations, management, and standards with high-standard economic and trade agreements, and continuously improve the quality and level of international trade and investment cooperation.
(The author is the Director of the Fifth Bureau of the Office of the Central Financial and Economic Affairs Commission)